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Global information services company Experian reveal UK business insolvencies down 15 per cent

The latest Insolvency Indexfrom Experian®, the global information services company, has revealed a year-on-year fall in business insolvencies during April in the UK.

The total number of insolvencies fell by 15.1 per cent during April compared to the same month last year – from 2,274 in April 2009 to 1, 818 in April 2010. As a result, this brought the year-on-year insolvency rate down from 0.11 per cent to 0.10 per cent in April.

The overall financial strength score[1] of UK businesses also improved, from 80.02 in April 2009 to 80.76 in April this year.

Mid sized businesses suffered the most in April. Companies with 26-50, 51-100 and 101-500 employees experienced the highest rate of insolvencies in April 2010 at 0.22, 0.26 and 0.24 per cent respectively.

Rolf Hickmann, Managing Director of pH, an Experian company, said: "Our analysis shows that it continues to be vital for businesses to understand the circumstances of those they are doing business with and the risks they could expose their company to."

"It is easier for the smallest businesses, with just one or two employees, to make adjustments to their operations and pull in the reins when times are challenging. For the largest business, there is the flexibility that comes with economies of scale, so insolvency rates among these extremes of business type are also low. Mid-sized businesses do not typically have the luxury of either of these benefits and can face the most pressure."

Other key highlights include:

The North East region saw the highest rate of insolvencies for the third consecutive month and was joined in April by Yorkshire and the West Midlands, all with a rate of 0.13 per cent

The East Midlands was the region to see the highest improvement, from an insolvency rate of 0.11 per cent in April 2010 compared to 0.15 per cent in April 2009.

Scotland remained the region with the lowest rate of insolvency, although did see a slight increase on last year’s figure up to 0.07 per cent from 0.05 per cent in April 2009

The Greater London region continued to be the region where businesses had the lowest financial strength score compared to other regions. However, it was also, along with Yorkshire, one of the regions that saw the biggest year-on-year improvement from 78.45 in April 2009 to 79.59 in April 2010.

Although they are among the companies with the highest insolvency rate, companies with 11-25 employees saw the greatest improvement year-on-year in the insolvency rate (from 0.32 per cent in April 2009 to 0.22 per cent).

The smallest businesses (with 1 to 2 employees) saw the most improvement in their financial strength scores – from 80.33 in April 2009 to 81.95 in April 2010.

The financial strength of businesses in the IT industry rose from 81.46 in April 2009 to 83.25 – the biggest improvement compared to other sectors.

Businesses in the oil industry held the highest financial strength score during April – 85.61.

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